PC Connection's CEO: A Principled Businesswoman
Patricia Gallup talks about her award-winning practices
Customer service is a dollar-and-cents issue for all businesses -- alienate
your customers and watch the bottom line turn red. For Patricia Gallup,
the 44-year-old chairwoman and chief executive officer of PC Connection
Inc., it's a also matter of ethics.
Gallup, whose company is a pioneer in the direct marketing of computers
to small businesses, just won the 1998 Ernst &Young "Entrepreneur of
the Year Award for Principle-Centered Leadership."
She and her partner, David Hall (he's now vice-chairman), founded PC
Connection with $8,000 in personal savings in 1982 at the beginning of
the PC revolution. In what's typically a low-service business,
where customers make big purchases sight unseen over the phone, Gallup went
to some lengths to create trust. Representatives at the company's toll-free numbers are
expected to educate callers in detail about computer systems. From early in its history, the company also took
financial risks by not putting through credit-card sales until products
were shipped, a practice it continues to this day, she says.
Gallup says treating customers and vendors ethically is key to
her success. Today, the Merrimack (N.H.) company brings in annual
revenue of more than $500 million from selling personal computers, software, and peripheral products. PC Connection has a customer base of
2 million people and 1,000 employees. The company went public in March,
1998. Gallup recently spoke with Business Week Online's Jeremy Quittner. Here is an edited
transcript of their conversation:
Q: How specifically does your company act in a principled way that
led to your getting this award from Ernst & Young?
A: One of our goals was to be a trusted and unbiased information source
as well as a source for the product. If a customer is interested in a computer
system, they can call us, and we find out what their needs are and step
them through the process of really setting up a system. We have several
layers of service: We have a support group within sales, but we also have
a technical support group, depending on the depth of information that is
Q: So I can spend five minutes with you or three hours?
A: It varies. There is no time limit.
Q: Did you see a need in the computer marketplace for expanded customer
A: When we started the business, direct companies did things quite differently.
They reduced the cost of getting products to people by not offering a high
level of service. At that time, many people were interested in buying a
computer, but did not have any computer experience. The industry was brand
new. The PC had just been released into the marketplace, and people were
really just starting to use them in their businesses.
Q: You have a lot of competition for what you do. The emphasis with
every computer company today is on trying to maintain good customer relationships
and on customer service.
A: Over 65% of our customers are repeat buyers. We pioneered many of
the customer-service programs that you probably take for granted.
Q: What are some of the things I might take for granted?
A: We didn't charge the credit card until we actually shipped the product.
So we didn't take [customers'] money and use [it] for a month or two before
we actually got the product to them, that was fairly early on.
We worked very closely with Northern Telecom and IBM to develop applications
for caller ID technology. If the customer has ordered [a system] recently, we
will know what system [that] customer has. And we will know if something is not
going to be a good match for their system. When we started using [the ID technology], a
number of people in the industry were using it but not admitting they were....
People had concerns about privacy. What we did was try to alleviate those
fears: We would block it if they did not want it to be used. It was
right in the advertising in the catalogs.
Another thing that differentiates us is our relationship with the vendors.
When we started our business, we used to have a policy where we would
pay them in one day. That was good for their business -- and ours. We were
all fledgling companies at the time. It was the right thing to do. And
it was also good for the business, because we were foremost in their minds
when...there was constraint of the product in the channels. Sometimes, the
vendors have had to make choices about who they were going to allocate
Q: What are some of the major trends you are seeing with small businesses?
A: That market is growing so rapidly that there are too many of them
to be serviced directly by the manufacturers. But [entrepreneurs] really want the
convenience of a direct relationship. They also want a reliable and trusted
information source for their computer needs. There is a lot of uncertainty
in the market. The life cycle of a product is about three months, so these
people are really concerned about obsolescence. And they want to be sure
that they are buying the right products that will meet their needs long enough to
get the return on their investment. The key reason this market is growing
so quickly right now is that everyone is trying to be more efficient, and
they are trying to automate as much as they can.